How Can I Ensure I can Repay my Payday Loan?

The biggest fear that most people have when taking out any loan is if they cannot mange to cover the repayments. With a payday loan this can be even greater because the repayment is usually just one lump sum and so it can be tricky to find the money. It is worth making sure that you are able to repay it before you take out the loan and here are some tips on doing so:

Find out how much you will pay and when

It is really important to start by finding out exactly how much you will need to repay and when. You will supply the lender with details of when you get paid. If your pay does not appear first thing on the day you are paid then in might be better to give them the day after so that you can be sure that the money is there. If they try to take the money before you get paid then this will be seen as a late repayment and you will be charged a fee.

Ensure your salary minus other direct debit will be enough to pay it

It is so important to look back over previous bank statements to make sure that there would normally be enough money to pay for the online loan once direct debits go out. Also look at the statement for this month to see whether this looks likely this month as well. If your direct debits come out before the loan repayment and there is not enough money left you will be charged a late payment fee. If you think that you will be short of money then you will need to do something drastic and quickly in order to make sure that there will be enough and there are some tips later.

Ensure there will be enough money to cover rest of expenses

It is also important to see whether you will manage until your next pay day once the loan is repaid. It could leave you significantly short and if this is the case you will need to be prepared for this and make some changes so that you can cope financially and do not need to borrow any more money. Take some time to do the calculations so that you can make plans to help you to cope if necessary.

Reduce spending

It can be really wise, even if you are confident that you will afford the loan and cope financially afterwards that you reduce your spending. If you can do this from the moment you take out the loan until you have had two pay days, then this should be enough time to make sure that your finances are working normally again. Try to cut out unnecessary items and wait to buy them in a few months’ time. Also check all prices and look for alternatives that are cheaper than what you normally buy if you can. Try to go shopping less often and use up things you already have rather than buying new. All small changes and savings you can make will add up help with your ability to cope financially.

Sell things you do not need
If you need quite a big chunk of money to help you out then you could look around your home and see whether you will be able to sell anything. If you have items which you no longer need or want then you may be able to sell them to make some extra money. There are plenty of places to sell things, such as table tops and car boot sales, auctions, classifieds and online on social media pages, auction sites or classified sites. You can sell things for a small amount of money or higher amounts depending on their condition and value. There will be costs for selling on many sites and so you may need to make sure that you are confident you can sell them for enough money to make back the costs as well as some extra to put towards your loan costs.

Earn more
It may be possible for you to earn more money in other ways. Perhaps you might be able to do some temporary work or pick up some extra hours in your current job. You may be able to do some freelancing or online work too. You will need to plan and start this as soon as you can as there is likely to be a delay until when you are paid and you will need to make sure that you get the money on time.

It may seem like there are a lot of complex things to think about but it is worth it. You will be able to be confident that you will be able to repay the loan and not struggle afterwards if you have a good plan in place. It will save you a lot of money compared with either not being able to pay the loan on time or struggling to cover all of your costs once the loan is repaid.

Should I use a Payday Loan to buy a new Computer?

It can be quite tricky deciding whether you can justify borrowing money. Often, we are told we should only borrow in an emergency or that we should only take on good debt. However, it can be difficult for us to define whether what we need the money for really does fit into these categories. It can be worth understanding the difference between good and bad debt and then considering whether your debt would fit into good or bad. Do not assume because you are considering a payday loan it will be bad debt. There is no exclusion of one particular loan type just because many people seem to think badly of it, the process is different to that.

What is good debt?
There are different definitions of good debt and it is probably best to combine them when you are making your decision. Firstly, good debt is when you are buying something that will help you to better yourself. Something that you will really gain form. Therefore, taking out a student loan, assuming you complete the course and go on to get a higher paid job than you would without one, would be considered to be good debt. A mortgage would often fall into this category too, although if you take on too high a mortgage it may not.

To qualify as good debt you also need to have thought hard about the loan. Comparing different types of loan so that you are confident that you are using the best loan type for you. You also need to make sure that you compare lenders and choose the one that will offer you the best value of money. By doing this research you will make sure that you have the right loan at the right price and this is very important.

What is bad debt?
Bad debt is when you use a loan to buy something frivolous. Also, that you do no research and pick any loan and do not check to see whether you are paying more than necessary for it. It could also be if you take out a loan but cannot afford the repayments. This would be something like taking a loan out to pay for a designer set of clothing when you have clothing that fits and cannot afford the loan which is an expensive one.

How to decide
The definitions make it seem easy to decide whether you loan would be considered to be good or bad, but actually it is not that easy. Most cases are not straightforward. For example, this computer that needs to be bought. If it is for playing games, then it could be seen as wasteful, but it could be there to help improve someone’s mental health and playing games could relax them. If it for study or work, then it could seem better but if they already have a computer that works then maybe not. Also, they may be choosing an expensive computer and there could be cheaper options that could be better. Also, they may be making a mistake with choosing this payday loan. It could be that they are not choosing the lender that can offer them the best value for money, that they have savings they could use instead of borrowing or that there are cheaper loans available to them that they should be considering.

So, you can see that the decision is not simple, It depends on the specific circumstances and the borrower. It can be complex and so it is worth having a check list to make sure that you are thinking about everything when deciding whether to take out a loan:

  • Is what I am buying useful or necessary?
  • Are there alternative ways to buy it such as saving up?
  • Am I using the right type of loan?
  • Am I borrowing the right amount?
  • Have I picked the lender that will give me best value for money?
  • Can I afford the repayments?

By making sure you answer yes to all questions but the second then you can be sure that you are making the right decision. It may take time to do the research but it will be worth it if you are able to be sure that you are not making a mistake. Often, we can be in too much of a hurry to get things done and we may not spend the time that we need to make important decisions like this. If we are worried or panicking it can be even worse as it is difficult to think logically when we are emotional. This is why it is so important to make sure that we slow down and take some time to ensure that the decision we are making is right as it can have big consequences in the future if it is not.